Corporate love for communism

Doing business in China is beginning to cost real money. Not that Chinese workers are buying second homes or anything like that: Their average wage is still a little short of a dollar an hour. But so many Chinese have now left their villages for the factories that the once bottomless pool of new young workers is beginning to run dry, and the wages of assembly-line employees are rising 10 percent a year.

Worse yet, new labor laws are making it harder for employers to cheat their workers out of their wages and benefits. Many American businesses that do their manufacturing in China had warned against those laws. But the good old days of Maoist labor discipline, when the government could send tens of millions of skilled workers down to the farms to be toughened up and periodically tortured, are gone. Mao's heirs, though not above a touch of torture here and there just to keep the system humming along, are concerned, as he was not, with achieving social harmony, even if that means compelling employers to sign, and honor, contracts with their employees.

According to a report by Keith Bradsher in The New York Times last month, such multinational companies as Canon (the printer and copier maker) and Hanesbrands (the North Carolina-based underwear empire) are expanding or building factories in Hanoi, where they churn out products for Wal-Mart and other American retailers. Foreign direct investment in Vietnam increased 136 percent between 2006 and 2007, while it increased just 14 percent in China.

The reason for the move south is straightforward: Vietnamese factory workers make about a quarter of what their Chinese counterparts earn.

But why Vietnam and not, say, Thailand, where labor is similarly cheap?

Vietnam's edge, it seems, is political. "Communism means more stability," Laurence Shu, the chief financial officer of Shanghai-based Texhong, one of the world's leading manufacturers of cotton fabrics, told Bradsher. This view, Bradsher reports, is common among Asian executives and some American executives, too, though they have the presence of mind never to say so on the record. After all, Vietnam, like China, outlaws independent unions. Absent free speech and free elections, no radical shifts in the government's economic policies are likely to be sprung upon unsuspecting American businesses.

Now, far be it from me to begrudge the Vietnamese their moment in the sun before global capital finds them too costly and moves on to Bangladesh and Somalia. But didn't we fight a war to keep Vietnam from going communist? Something like 58,000 American deaths, right? And now American business actually prefers investing in communist Vietnam over, say, the more or less democratic Philippines? In all likelihood, it would prefer investing in communist Vietnam to investing in a more chaotic, less disciplined democratic Vietnam, if such existed.

Let's imagine, just as an exercise, that we're trying to explain this to those 58,000 Americans and their loved ones. We could argue that by investing in communist countries, we're pushing them toward democracy. But everything we know about China suggests that, in reality, such investments merely make authoritarian regimes stronger.

We could argue that what we're really doing is bringing communist nations into the world capitalist system. Then again, the effect of bringing into the global labor pool hundreds of millions of low-wage workers – people whose wages are held in check by both capital mobility and communist repression – is to hold down wages in democratic nations with advanced economies and with no national strategy to preserve and expand good jobs at home (i.e., in the US).

Or we could argue that our onetime opposition to communism was noble and all that but that, unburdened by the illusions of the past, American business, backed by the American government, has realized that the problem with communism wasn't that it was undemocratic but that it was anticapitalist. And that once communism was integrated into a world capitalist system, its antipathy toward democracy not only wouldn't be a bad thing but would actually be good.

That is clearly the political logic that underpins our involvement with China.

It's a little dicier to say this about our growing involvement with Vietnam, since all those Americans whose names are on that wall on the Mall probably didn't realize how compatible with global American enterprise Vietnamese communism would turn out to be or how the cause of democracy would turn out to have been of no real importance at all.

I guess a note from the American establishment to those men and women with their names on the wall would be in order. Something like: Say, guys – sorry 'bout that!